China’s new energy vehicles production records first-ever Y-o-Y decline in July: SMM

According to the latest update from Shanghai Metals Market, about 73,500 new energy vehicles obtained qualification certificates in China in the month of July. This marks a decrease of 43 per cent from a month ago and 18.3 per cent from the same period last year, the first-ever Y-o-Y decline since the NEV sector emerged a few years ago.

Installed power battery capacity also shrank by 29 per cent month-on-month and 26.9 per cent year-on-year to 4.69GWh.

After a rapid expansion in the first half of the year, China’s NEV sector hit a trough in July, the first full month since the new NEV subsidy scheme and vehicle emission standards took effect.

Due to the shift to new emission standards, there had been a rush to clear existing inventories of diesel and gasoline-powered vehicles, resulting in slower automobile production.

Production of electric passenger vehicles dropped 55.8 per cent over a month in July and stood at 43,300 units. Production of electric busses declined more than double to 12,800 units.

Meanwhile, lower subsidies and cash flow pressure drove NEV manufacturers to favour lithium iron phosphate (LFP) batteries. Installed LFP batteries came in at 2.48GWh last month, taking up 52.9 per cent of the total.

Beside costs, higher security played an important role as well in helping LFP batteries outperform ternary ones.

Some automakers are expected to launch new models in August, while the vehicle production and battery installation is expected to rebound at the end of the year when the government subsidies will be completely withdrawn in 2020.

The NEV and battery markets are expected to pick up at the end of September, as some producers would be clearing inventories in August.

In July, Chinese battery maker CATL remained the largest battery supplier, with a market share of 66.5 per cent in terms of battery installation.